(Yicai Global) May 9 -- Jiangsu Yueda Kia Motors will put about 100 management staff on temporary leave during which they will be paid minimum wages, insiders told Yicai Global.

A screenshot of an internal notice has been circulating online today and the insiders confirmed its authenticity. The joint venture between South Korean auto giant Kia and Jiangsu Yueda Investment has been struggling for some time, and it is currently undergoing a transition from fossil fuel-powered cars to new energy vehicles.

The staff impacted are mostly managers and division heads, an executive at the venture told Yicai Global, adding that the company would still be hiring staff for new positions as part of its overhaul. Yueda Kia Motors needs to reorganize its businesses and staff structure as it shifts to NEVs, the notice said.

The furlough will begin next month, and the staff affected will receive full salary in the first month. But for the following 11 months, they will only get the minimum wage paid in the venture's home city of Yancheng, Jiangsu province, and they will not get other employment perks during the period. The minimum monthly wage in Yancheng is CNY2,200 (USD318). 

The company, previously known as Dongfeng Yueda Kia Motors, was set up in 2002 with a registered capital of USD624 million. It was 25 percent funded by Dongfeng Motor, 25 percent by Yueda Investment and 50 percent by Kia. But Dongfeng pulled out of the ailing JV in 2021, so it became a 50-50 venture. 

The company has suffered a persistent decline in sales in the Chinese market amid increasingly heated competition, with sales peaking at 650,000 units in 2017 before falling to 95,000 last year. It has been also in the red for a long time, running up a CNY3.7 billion (USD534.5 million) loss last year. 

But Kia, a unit of Hyundai Motor, has stressed multiple times that it does not intend to give up on the venture or the Chinese market. 

The company has encountered challenges in its development in China in recent years, Richard Yang, Kia China's chief operating officer, told Yicai Global at the recent Auto Shanghai. But the firm will keep “ploughing on” and is increasing its investment in the Chinese market, Yang said. 

There are plans to introduce six electric vehicle models in the Chinese market by 2027, and a target for NEV sales to account for 40 percent of all new car sold by 2030.

Editors: Tang Shihua, Tom Litting